The government has announced a "a set of special arrangements" for fleets in its response to the electric Vehicle Excise Duty (eVED) consultation.
It says that fleets will be able to provide estimated mileage readings for their vehicles instead of being required to share actual odometer readings.
The move is designed to remove the administrative burden on fleet, leasing and rental businesses.
Introduced in the Autumn Budget last year, the eVED policy will come into force in April 2028. It will apply a mileage-based tax of 3p per mile for fully electric vehicles and 1.5p per mile for plug-in hybrids, with ministers confirming the implementation date remains unchanged.
Among the changes is the decision to abandon routine additional mileage checks for vehicles under three years old. Instead, motorists will generally self-report mileage when renewing Vehicle Excise Duty (VED), while fleet operators will be permitted to provide estimated figures rather than relying on drivers to submit odometer readings.
The Government said this approach reflects feedback from the sector, allowing fleet managers to oversee mileage reporting centrally. In most cases, estimates are expected to align with a vehicle's contracted mileage allowance, while rental operators may use average fleet mileage where appropriate.
To help streamline the process, the Government also plans to introduce multiple payment methods, including an application programming interface (API) for larger operators and a web-based portal for smaller fleets. Authorised users will be able to pay both eVED and VED for their entire fleet at fixed intervals using aggregated payments, with guidance and system testing promised before launch.
Industry concerns that vehicles could be sold with unpaid eVED liabilities have also been addressed. Businesses will now be able to make top-up payments before a vehicle is defleeted, ensuring any outstanding tax is settled before disposal and reducing the risk of affecting resale values.
Industry reaction
Toby Poston, BVRLA chief executive, said: “When it comes to the Wrong Tax at the Wrong Time, eVED, the fleet sector has spoken loud and clear. This poorly designed and scheduled tax would pile extra cost and bureaucracy onto fleets and drivers and eviscerate EV demand just as the Government's sales targets start ratcheting-up.
“It is great that the government has taken some of the roughest edges off its eVED plans. They've accepted that a tax designed around private motorists won't work for the fleets that are driving the UK's transition to electric vehicles.
“But there is no avoiding the fact that you can't create a smooth switch to electric vehicles by making them more expensive to own. The mechanics of the tax may have improved, but the timing is still wrong.”
Jon Lawes, Managing Director at Novuna Vehicle Solutions: "We welcome the Government listening to industry concerns and refining its eVED proposals to better reflect the role of fleets in the UK's transition to electric vehicles.
"However, the reality is that this still introduces an additional cost at a time when the focus should be on making EVs more accessible and affordable. Fleets have led the way in driving EV adoption, and maintaining that momentum will be vital if the UK is to meet its net zero ambitions.
"The Government has made progress, but the timing remains a concern. If we want more businesses and motorists to choose electric, policy needs to encourage the transition, not make it more expensive."
David Bushnell, Director of Consultancy and Strategy at Fleet Operations, said: “The government’s decision to introduce specific eVED arrangements for fleets is a welcome acknowledgement that a system designed around individual motorists would not work for businesses operating vehicles at scale.
“Allowing fleets to provide central mileage estimates, make aggregate payments and settle liabilities before defleeting should reduce some of the administrative burden.
“The proposed API and web interface are also sensible, provided they are thoroughly tested and supported by clear guidance ahead of April 2028.
“These changes, however, address the mechanics of the tax rather than its wider impact. At 3p per mile, a fully electric car covering 20,000 miles a year would attract an annual charge of £600, which fleets will need to build into whole-life cost calculations.
“The government must now work closely with the fleet industry to ensure eVED does not create unnecessary friction or weaken the business case for electrification.”
